In case you are suffering from unwanted debt, you might want to consider opting for debt counselling advice.

I understand there are a lot of questions that might come to your mind when you think of debt counselling, which is why I have compiled this complete guide for you. 

This guide has all the necessary information you need, FAQs, and much more. 

What is debt counselling?

Debt counselling is a formal and legal process. It allows you to get in touch with a debt counselor to help you with your debt problems. 

Your debt counselor reviews your financial situation and restructures your payment plan. Then a court order is received which confirms your new payment.

What is an effective way to avoid debt?

There are several ways that you could take into consideration to avoid debt. I will list a few down for you. 

debt counseling advice

These include:

  • Having a backup emergency fund
  • Try paying off your credit card balance in full amount
  • If you can’t afford it in one credit card payment, do not consider buying it
  • Cut out all luxury expenses and buy things that are necessary only
  • Focus on budgeting
  • Try not to use your credit card as a substitute for cash advances
  • Limit the number of credit cards you have
  • Create a tracking list of all your expenses so you know where you have spent
  • Try and collect coupons
  • Get help if you feel you have problems saving

How can debt counselling help?

There are a number of benefits of debt counselling. I will list down the most significant ones for you. 

These include:

  • Your creditors will no longer be able to take actions against you if you are in debt counseling.
  • Your creditors can not contact you directly.
  • You do not have to worry about people finding out that you went through debt counseling. This is mainly because there is no permanent record kept of individuals who undergo debt counseling.
  • You only have to make one monthly payment
  • The budget that will be decided for you will take your financial position into consideration first. 
  • Your monthly payments are based on your affordability and before the provisions are decided for your debts.
  • You will be advised methods of saving and cost cutting.

Are there any disadvantages of debt counselling?

There could be some disadvantages associated with debt counselling.

These include:

  • In case you are going through debt counselling, you might not be allowed to get more credit.
  • Since the fees is set by law, you will have to make some payments for counselling
  • It could take longer than usual to pay off your debt. This is because you will be paying less than the debt you took for each month.

Is debt counselling a good idea?

Yes, it could be beneficial for you in the long run. Counseling could help you manage your debt problems. Moreover, you could be able to understand alternative debt solutions.

Debt counselling could also prevent you from getting into more debts. 

Since your advisor will ensure that you are able to make monthly payments, you might not fall into bankruptcy. 

Furthermore, your counselor could negotiate with your creditors. They might be able to convince them into reduced monthly payments.

Can debt counselling affect your credit?

If your counselors negotiate to lower the interest rate, this could hurt your credit score.

A reduced credit score could stay in your file for an extensive period of time. This could affect your ability to get loans in the future. 

Creditors will be able to review your file and may not agree to lend you.

Is it possible to get debt help for the military?

Yes, you could be able to apply for debt advice if you are in the military. Your finances will be checked and you will be informed about the possible debt solutions you could pick from.

These include:

This could be available for those serving in the British Army, Royal Navy, and Royal Air Force. I would suggest you speak to your advisor for more information.

Frequently Asked Questions (FAQs) 

Can I get out of debt counselling?

You could only get out of debt counselling once your agreement has ended. This means that once you have paid all your dues on time, you could be able to get out of debt counselling. 

Is it possible to get denied debt advice?

Yes, it is possible to get denied. 

The main reasons for this include:

  • You do not make enough money to keep up with your monthly payments.
  • Your debt loan is too much.
  • Your credit score is significantly low and does not qualify

What can Debt Advisors do?

Your debt advisors could provide a number of benefits.

This includes:

  • Reducing your monthly payments to make it affordable for you
  • Contacting your creditors so they do not force you directly to make payments
  • Protecting your assets. This includes your home

Who do I contact for online debt advice?

You could contact a number of debt advisors online. 

These include:

  • Money Advice Service
  • StepChange
  • PayPlan
  • National Debt Helpline
  • Citizens Advice

Is debt counselling free?

Debt counselling is not free if you are seeking a private firm. You will have to make monthly payments to your advisor. However, it is a small amount which is set by the law. 

Is it possible to do my own debt settlement?

Yes, you could be able to settle your own debt. In this case, you will be communicating with your creditor directly.

However, this could be risky. Since you have security, your creditors could contact and force you into making payments. 

To conclude

Your debt counselling Advisor will make sure all your problems are discussed before suggesting a debt management plan to you.

Read the guidelines provided carefully in order to be well informed. 

I would advise you ask your counsellor plenty of questions so that all your confusions are clarified. 

For further information, please feel free to contact us. 

About the author

Scott Nelson

Scott Nelson is a financial services expert, with over 10 years’ experience in the industry, including 6 years in FCA regulated companies. Read more
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